Oh, No! They Accepted Our Offer
In the latest 21 Hats Podcast, Laura Zander has mixed feelings about buying a building for her business.
Here are today’s highlights:
Global supply chains take another hit.
Returning to the office is exposing a generation gap.
And a restaurant in California says it wants to serve only unvaccinated customers.
THE 21 HATS PODCAST
Episode 70: Oh, No! They Accepted Our Offer: This week, Laura Zander, Diana Lee, and Dana White all share big news. Laura tells us that she and her husband/co-founder Doug put in a bid to buy a building for their business in Reno—and she’s not sure how she feels about the fact that their offer was accepted. Diana explains why she’s decided to pay a fortune to take over space vacated by glitzy magazine company Conde Nast in Manhattan’s Freedom Tower, a move that required her to put down a $2 million security deposit. And Dana tells us that she’s had preliminary conversations about opening Paralee Boyd salons on U.S. military bases around the world, which prompted Diana to encourage Dana to start vetting investment banking firms: “I'd be like, ‘Here's the contract with the Army. Give me the money so I can scale this out.’”
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SELLING THE BUSINESS
Gene Marks says that more than half of American small businesses are owned by someone over 55—and that more of them should consider selling to their employees: “Whatever income your company makes is non-taxable for the portion of your company owned by the entity, so if the entity ultimately owns 100 percent of your company’s shares, your company pays no federal income tax. Yes, you read right: no federal income tax.”
“But the biggest benefit is for workers. Employee stock ownership plans are just like any other benefit plan for your company — a form of compensation that will attract and keep employees.”
“‘Our ESOP plan has significantly helped with turnover, commitment, and how long people stay with the company,’ Baker said. ‘My productivity numbers are just off the charts.’”
“‘You really need to have about 20 employees, and you have to have a minimum level of annual revenues’ — anywhere between $500,000 and $1,000,000, said Kevin McPhillips, executive director of Pennsylvania Center for Employee Ownership.” READ MORE
PLUS: Here’s a 21 Hats Conversation with a more skeptical look at ESOPs.
THE COVID ECONOMY
Global supply chains are taking another hit: “Fresh coronavirus outbreaks are forcing factory shutdowns in countries such as Vietnam and Bangladesh, aggravating supply chain disruptions that could leave some U.S. retailers with empty shelves as consumers begin their back-to-school shopping. The overseas work stoppages are just the latest twist in almost 18 months of pandemic-related manufacturing and transportation woes. The new infections come as two of the largest U.S. railroads last week restricted shipments from West Coast seaports to Chicago, where a surge of shipping containers has clogged rail yards.”
“Supply headaches stretching from Asian factory towns to the American Midwest are intensifying as the economic recovery tries to outrun the highly infectious delta variant.”
“Spot shortages of clothing and footwear could appear within weeks, and popular toys may be scarce during the holiday season.”
“Even as the U.S. economy is slated to enjoy its fastest growth since 1984, supply lines now are expected to remain snarled through the first half of next year or longer, according to corporate executives.” READ MORE
The U.S. isn’t lifting international travel restrictions: “President Biden and his administration have faced pressure from international allies and the airline industry to ease travel restrictions barring most nonessential travel to the U.S. by non-citizens during the Covid-19 pandemic. Administration officials discussed the issue at a senior-level White House meeting on Friday, the official said. ‘The administration understands the importance of international travel and is united in wanting to reopen international travel in a safe and sustainable manner,’ the official said.”
“The Centers for Disease Control and Prevention recently advised Americans against traveling to the United Kingdom due to a surge in coronavirus cases there.”
“Last week, the administration also extended U.S. border restrictions with Canada and Mexico for another month, despite Canada’s decision to admit fully vaccinated Americans beginning on Aug. 9.” READ MORE
A restaurant in Huntington Beach, California, says it wants to serve only customers who have NOT been vaccinated: “When restaurants across California halted indoor dining as the COVID-19 pandemic took hold in March 2020, Basilico’s Pasta e Vino in Huntington Beach continued to welcome patrons. When officials issued an order for establishments to mandate face coverings to stem the spread of the virus, the Orange County eatery declared itself a mask-free zone and required that diners remove them before entering. This week, the Italian restaurant issued another decree: Proof of being unvaccinated is required for entry.”
“‘We have zero tolerance for treasonous, anti-American stupidity,’ the signs read.”
“An employee confirmed the eatery is not actually checking patrons’ vaccine status ...” READ MORE
Returning to the office is exposing a generation gap: “While workers of all ages have become accustomed to dialing in and skipping the wearying commute, younger ones have grown especially attached to the new way of doing business. And in many cases, the decision to return pits older managers who view working in the office as the natural order of things against younger employees who’ve come to see operating remotely as completely normal in the 16 months since the pandemic hit. Some new hires have never gone into their employers’ workplace at all.”
“‘Frankly, they don’t know what they’re missing, because we have a strong culture,’ Mr. Gross said. ‘Creative development and production requires face-to-face collaboration. It’s hard to have a brainstorm on a Zoom call.’”
“In a recent survey by the Conference Board, 55 percent of millennials, defined as people born between 1981 and 1996, questioned the wisdom of returning to the office.”
“Among members of Generation X, born between 1965 and 1980, 45 percent had doubts about going back, while only 36 percent of baby boomers, born between 1946 and 1964, felt that way.” READ MORE
States that cut supplemental unemployment benefits did not see a boom in hiring but it did change who gets hired: “The teen hiring boom slowed in those states, and workers 25 and older returned to work more quickly. A new analysis by payroll processor Gusto, conducted for The Washington Post, found that small restaurants and hospitality businesses in states such as Missouri, which ended the extra unemployment benefits early, saw a jump in hiring of workers over age 25. The uptick in hiring of older workers was roughly offset by the slower hiring of teens in these states. In contrast, restaurants and hospitality businesses in states such as Kansas, where the full benefits remain, have been hiring a lot more teenagers who are less experienced and less likely to qualify for unemployment aid.”
“The findings suggest hiring is likely to remain difficult for some time, especially in the lower-paying hospitality sector.”
“The analysis also adds perspective to the teen hiring boom, revealing that more generous unemployment payments played a role in keeping more experienced workers on the sidelines, forcing employers to turn to younger workers.”
“There’s a growing trend in help wanted ads of lowering the age and experience requirements, especially in the hospitality sector, according to QuickHire, a recruiting firm in Wichita.” READ MORE
The Biden administration is pushing regulatory changes designed to increase worker pay: “The rule changes, most of which are still in progress, would affect workers such as federal contractors, tipped employees, and workers who are jointly employed, such as those with jobs at franchised brands. In some cases, the changes seek to reverse Trump administration efforts. In others, the Labor Department is working to implement its own rules. These include the agency’s announcement last week that it had begun the process of raising the minimum wage for federal contractors to $15 an hour and ensuring it will continue rising to keep pace with inflation.” READ MORE
Immigration restrictions are forcing farmers to train more Americans to be shepherds: “Mr. Stubbs, a fifth-generation sheep farmer in southern Utah, did not expect to be giving a hands-on shepherding seminar this summer, but he was stuck. He needed a second experienced herder, and the one who was supposed to arrive in the spring from Peru did not get approval for a special agricultural visa. Now backlogs at some foreign passport offices and American consulates — compounded by the pandemic — were delaying a replacement. That’s why Mr. Stubbs last month ended up hiring Duane Rogers, a type of worker rarer than a blue lamb in these parts: an American-born beginner who was eager to herd sheep.”
“A herder has to stay with the sheep 24 hours a day through the roughly 10-month period on the open range, in sun and rain, hail and snow, whether temperatures climb toward 100 degrees or drop below zero.”
“The workday begins at sunup and ends at sundown, although there may be nights when you need to help the guard dogs scare off a coyote or a mountain lion. There are no weekends or holidays off.”
“For workers under the visa program, the pay is set by the government, and has increased in recent years. In Utah, it is $1,728 a month plus transportation, room and board.” READ MORE
If you see a story that business owners should know about, hit reply and send me the link. If you got something out of this email, you can click the heart symbol, you can click the comment icon below, and you can share it with a friend. Thanks for reading, everyone. — Loren